Per-patient costs ranged from $12,550 per “episode of care” at Diley Ridge Medical Center in
Canal Winchester to $21,609 at the New Albany Surgical Hospital. Both hospitals are part of Mount
Carmel Health System; Diley Ridge also is affiliated with Fairfield Medical Center.

The data — the most recent available — cover the period of May 2010 through February 2011.

Medicare paid $9.22 billion directly to Ohio hospitals in 2009, according to the Kaiser Family
Foundation. The program’s growth is one of the primary threats to the nation’s long-term solvency,
and the federal government is working to rein in costs in part by heading off unnecessary hospital
care.

The Medicare data include only “episodes of care” associated with inpatient admissions at each
hospital: care provided during the patient’s stay, in the three days before admission and in the 30
days after the patient’s discharge.

To allow for comparisons, Medicare adjusted the numbers to account for hospitals that receive
higher payments for medical-education purposes or for those that care for higher percentages of
low-income patients.

The data, however, are not adjusted for risk, meaning that they don’t take into account patient
age and severity of illness.

When adjusted for risk, for example, Knox Community Hospital in Mount Vernon had the area’s
highest rate of Medicare spending per patient: 8 percent above the amount paid per patient
nationally. And, despite having one of the region’s highest per-patient spending rates, the New
Albany Surgical Hospital had the lowest
risk-adjusted spending per patient: 11 percent below the U.S. per-patient amount.

Knox Community Hospital didn’t return a call seeking comment this week. Mount Carmel Health
System spokesman Jason Koma said New Albany Surgical Hospital’s orthopedic care is carried out in
an “efficient manner.”

The Centers for Medicare and Medicaid Services, or CMS, chalked up the per-patient spending gap
among hospitals to differences in their readmission rates, and to the degree to which they use more
costly post-acute care, such as nursing homes, instead of home care or outpatient care.

“The reason why each hospital has above- or below-average cost ... will depend on how the
hospital coordinates patient care before, during and after admission,” a CMS spokesman said in a
prepared statement.

In certain cases, Medicare already limits payments for hospital readmissions that exceed
expected levels, said Steve Umland, senior vice president of finance at OhioHealth. And next year,
Medicare will begin penalizing hospitals that have too many patients return soon after they’ve been
discharged.

OhioHealth and Mount Carmel are both taking steps to curb hospital readmissions, Umland and Koma
said. Mount Carmel, for example, has placed a greater emphasis in recent years on its heart-failure
services program.

“It’s really helping patients learn to live with heart failure,” Koma said. In doing so, the
health system hopes to reduce readmissions among those patients.

When adjusted for risk, per-patient Medicare spending is 2 percent higher at Ohio State
University’s Wexner Medical Center than the state median. But in a prepared statement, Jeff
Ellison, administrative director of financial services, said: “We feel we’re in line with our
peers.”

CMS said it will continue to monitor changes in hospital utilization over time. It said
hospitals received confidential reports specific to their institutions that included detailed
information on providers that were significant contributors to their Medicare costs.

Medicare wants the hospitals to work with those providers — doctors, for example — to better
coordinate care so as to improve efficiency.